Crowdfunding can help startup businesses get to market faster

pebbleEntrepreneur Paul Chipperton aims to raise $129,000 by the end of October for marketing a technology that can suspend the arrival of distracting emails, text messages and phone calls to handheld and other devices.

But he’s leaving this fundraising to online, not to the banks or venture capital. In a growing movement called crowdfunding, entrepreneurs make video pitches to consumers to help get their projects to market. It all comes down to whether the amount of donations meet the startup company’s funding target and deadline.

Chipperton is putting his MyFocus Solution product on the U.S.-based crowdfunding platform Kickstarter, which launched in Canada earlier this month.

“If you don’t make that threshold number, the project doesn’t get funded and you go about your business,” said Chipperton, CEO of CanFocus Technologies Inc. in Toronto.

Chipperton described his product as a “little force field of solitude” to help people get their work done without electronic distractions.

In essence, MyFocus uses software to put messages and calls in a “holding pattern” on cellphones, laptops and tablets for up to two hours with no ringing or buzzing or alerts, he said. Consumers can download the app for their smartphones and tablets or plug a small device into their computers.

By pledging $5 to $8,000, donors can receive various rewards — including T-shirts, the product, or becoming an observer at meetings of the company’s board of directors for a year — for their cash on Kickstarter.

“It’s a transaction. You put money down and you get something back.”

Even with Kickstarter taking a five per cent fee for successfully funded projects, Chipperton said it’s still better terms and conditions than he would get from a bank, investment firm or private equity funding.

Consumers are charged a processing fee of three per cent for pledges of $10 or more and five per cent for pledges less than $10. There are no fees for projects that aren’t successfully funded and pledges are cancelled. Kickstarter says proposed projects must be “creative” and have an concrete end result, like a film or product, and not be used for raising money for causes or to pay bills.

Kickstarter, launched in 2009, and says 4.9 million people have since made pledges totalling $790 million, funding 48,000 projects around the world. One of its best-known projects was the Pebble smartwatch that connects to smartphones for access to email. It raised more than $10 million within a month in 2012, well beyond it’s quest for $100,000.

Ottawa-based tech startup Black Sumac so far has raised more than $153,000 on rival crowdfunding platform, Indiegogo, for its home security monitoring device called Piper, which is controlled remotely by smartphones and tablets.

“Basically, it’s like a marketing launch,” said CEO Russell Ure. “You’re proving to people in the investment community that there’s actually buyers there for that product.”

Black Sumac is taking pledges up to $1,500. For a pledge of $209, consumers get a Piper, which is expected to retail for about $250.

Ure said venture capital firms watch crowdfunding and successful campaigns help establish credibility for potential investment.

E-commerce professor Tim Richardson said small companies don’t need to ask for a lot of money.

“It’s not the amount. It’s the speed,” said Richardson, who teaches at the University of Toronto and Seneca College. “It takes their product from conceptualization to be able to actually launch and have people start using it. The early adopters, because of social media, can create a big impact.”

Kash Pashootan, a vice-president and portfolio manager at First Avenue Advisory, a Raymond James company in Ottawa, said it’s challenging for startup companies to access to capital in Canada because the appetite for risk is low.

As a result, Canadian startups are often forced to sell their business to a larger company, said Pashootan.

Quebec City’s Quattriuum tech is also using Kickstarter to help pre-sell its product, a sensor that attaches to a hockey stick that can calculate the speed of a slapshot, then download the information to an iPhone or Android smartphone or tablet.

Called the FWD Powershot, backers will get the product as a reward for a donation of $100. It’s expected to retail for $150. So far, Quattriuum has raised more than $20,000 with a goal of $75,000.

“The less we need to borrow, the better we feel,” said Quattriuum president Olivier Munger.

Source: LuAnn LaSalle – The Canadian Press
Link: http://www.ctvnews.ca/sci-tech/crowdfunding-can-help-startup-businesses-get-to-market-faster-1.1465338

Tags: , , , , , , , ,

HEADLINE NEWS

Baltimore SunHarford still opposes crowdfunding sites for school donationsBaltimore SunRaising money through online crowdfunding sites is an ideal way for teachers to find the funds to purchase classroom materials and should be restored, the head of the Harford County teachers' u [...]

U.S. News & World ReportNo Cash for Hate, Say Mainstream Crowdfunding FirmsU.S. News & World ReportThe block on mainstream crowdfunding is just the latest blow to far-right activists operating online. In the last 24 hours, neo-Nazi website the Daily Stormer had its domain regi [...]

LITTLE GUIDANCE FROM IRS ON TAXING CROWDFUNDING CONTRIBUTIONSBloomberg BNAWhether it's a musician raising money to produce an album, an inventor with a great idea, or a family in distress that needs help, crowdfunding through platforms such as Indiegogo and Kickstarter has become [...]

Crowdfunding: Funding ideas the right wayReuters (press release) (registration)The term “crowdfunding”, or “crowdsourcing”, refers to an open call made to the world via the Internet to solicit funds from interested parties to finance a business or social project. The funds received ma [...]

Crain's Cleveland Business'Smaller' gifts can go long way for Clinic's crowdfunding platformCrain's Cleveland BusinessFor an institution accustomed to securing multimillion-dollar donations, Cleveland Clinic's latest fundraising effort has some relatively [...]

What do you think of crowdfunding campaigns?Japan TodayI think that if there is a responsibility and guarantee of sorts that the crowdfunding site will actually act with the users to go after companies which waste money or run off with it, then it would be a great thing for the future [...]

ForbesWhat Works In Equity Crowdfunding -- Insights From ResearchForbesAs we have recently celebrated the fourth anniversary of the signing of the JOBS Act into law, it is a good time to take stock of the effect that the legislature had on equity crowdfunding in the United States. It [...]

VentureBeatAmid Silicon Valley crackdown on alt-right, Gab social network ...VentureBeatAs high-tech firms have begun taking steps to weed out some of the most offensive right-wing hate groups, alternative social network Gab has seen a surge in ...Gab is becoming a haven for hate spee [...]

FortuneIndiegogo's Difficult Path to Offering Equity CrowdfundingFortuneIndiegogo founder Slava Rubin discusses how Indiegogo's equity crowdfunding service has been performing since its launch in 2016. Photograph by Indiegogo. E-mail; Tweet; Facebook; Linkedin. Share icons. [...]

The HinduKoodiyattam centre goes for crowdfundingThe HinduThe goal is to raise the sum through the crowdfunding platform BitGiving (https://www.bitgiving.com /nepathya) to train a new generation of artistes in what constitutes the only surviving form of ancient Sanskrit theatre in the [...]

CFB Finance

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |